Earlier this week, I reviewed a number of big-name Internet stocks that were set to report earnings either this week or next week. Let’s consider how some of these companies fared in the most-recent quarter…
|Symbol||Earnings Estimate||Actual Result||Surprise||Portfolio Grader Rating|
Now, let’s turn our attention to the technology sector as a whole. Right now, converging technologies are creating new industries overnight. From cloud computing to mobile technology to semiconductors, innovative companies on the cutting edge of these trends stand to make investors a boatload of money.
And today, I’d like to take a closer look at several technology companies that are making the grade—and warn you about a couple that receive failing marks.
Earnings Spotlight: Apple
First, let’s focus on one of the most well-known and top-performing technology stocks on the market right now: Apple Inc. (AAPL).
This A-rated tech behemoth has been one of my favorite companies for years, and I’ve recommended it on a number of occasions over the years. Recently, the company has made some significant changes that will reward shareholders handsomely.
- Hiked its dividend twice in the past 18 months, now yielding 2.1%.
- Increased stock buyback program to a whopping $90 billion.
- Split its stock 7-for-1 to make it more accessible to investors.
Of course, the company has faced its fair share of hiccups as of late, with the iPhone 6 launch and cancelled update of its iOS 8.01 mobile software. But Apple has a loyal customer base, who will be vocal when there are issues and yet still likely to stick with the iPhone until the issues are resolved.
And when Apple reported fiscal fourth quarter results on Monday, it didn’t disappoint.
Apple CEO Tim Cook announced that demand is “off the charts” for the newest iPhone models—and the company hasn’t even tabulated results for the iPhone 6’s debut in China. Last quarter, Apple sold 39.3 million iPhones and 13.37 iPads.
In total, Apple earned $8.5 billion, or $1.42 per share, on $42.12 billion in revenue. Compared with the year ago quarter this works out to 13.3% bottom-line growth and 12.4% top-line growth. Analysts were looking for $1.31 EPS on $39.85 billion in revenue, so Apple posted an 8.4% earnings surprise and a 5.7% sales surprise.
Looking ahead to the fiscal first quarter, Apple expects to bring in between $63.5 billion and $66.5 billion in revenue. This is on the higher end of the Street view, which is calling for $63.52 billion in revenue.
Technology Earnings Scorecard
Intel (INTC) reported a strong third-quarter On October 14, posting earnings per share of $0.66 on $14.6 billion in sales. The consensus estimate was for $0.65 earnings per share on $14.5 billion in revenues. So the company posted a slight earnings and sales surprise. Looking forward, Intel is looking for revenues of $14.7 billion in the fourth quarter, which is above analysts’ expectations for $14.48 billion. This A-rated stock is a buy.
Sandisk (SNDK) revealed on October 16 that its profit slipped in the third quarter, falling to $262.7 million, or $1.09 per share, down from $276.9 million, or $1.18 per share, last year. Excluding items, the company posted $1.45 per share. Revenue increased 7% to $1.75 billion. The consensus estimates was for $1.33 earnings per share on $1.77 billion.
Lexmark International (LXK) posted better-than-expected third-quarter financial results on Tuesday. It reported $1.05 earnings per share on $921.1 million, which beat the consensus estimate for $0.93 earnings per share on $888 million in revenues. Shares popped 8% on the news.
Upcoming Technology Calendar
Today, October 23
Microsoft (MSFT)—After the market close today, Microsoft will announce its third-quarter earnings results. The company currently earns an A-rating, but analysts are looking for $0.49 earnings per share which is down from $0.62 per share in Q3 2013. So watch this report closely before diving in.
Friday, October 27
Seagate Technology (STX)—As its current C-rating can attest, Seagate Technology’s earnings are slowing down. Analysts are looking for $1.25 per share, down from $1.29 last year. Proceed with caution.
Wednesday, November 12
NetApp Inc. (NTAP)—After posting positive earnings surprise in the past four quarters, NetApp’s earnings and sales are slowing down—and the company currently earns a C-rating. Earnings and sales are projected to slide 6% and 0.10%, respectively, in the third quarter.
Tuesday, November 25
Hewlett-Packard Company (HPQ)—This personal computer giant has shown positive stock performance (shares are up 24% year to date), solid earnings growth (5% expected in the fourth quarter) and good revenue growth (up 1.5% in the third quarter). HPQ earns an A-rating and is a buy.
The energy sector has garnered its share of the headlines this year, thanks to the geopolitical tensions overseas, the energy boom here in the U.S. and the recent slide in crude oil prices. Given everything in play, I’ve received a lot of questions as of late regarding what’s next for energy companies.
So in the October 28 edition of the Market 360 earnings series, we’re going to preview and recap the earnings reports of some of the biggest names in the energy sector, including Occidental Petroleum (today), ConocoPhillips (Wednesday) and Chevron (Friday). And I’ll also provide my latest thoughts on what we can expect from oil and gas companies going forward. So be sure to read our next Market 360 on October 28.
*Please note that earnings dates can change. All expected earnings dates mentioned are accurate as of the publishing date.